A simple explanation of how money moves around the banking system (2013) | Hacker News Reader

A simple explanation of how money moves around the banking system (2013)

gendal.me

162 pointsrndn17 comments

This is the problem that Stellar (https://stellar.org) can solve better than Bitcoin. Unlike Bitcoin which takes 10-30 minutes to confirm transactions, Stellar takes seconds with its new consensus system (https://medium.com/a-stellar-journey/on-worldwide-consensus-...). This eliminates the need for mining which consumes a exorbitant amount of electrical energy. Stellar is also built to work with a diverse set of currencies (USD, EUR, CNY, BTC etc).

I'd bet my money on ripple instead of stellar. RL is more professional and has much better personal resources. From Stellar Foundation I've seen only a chain of fails - initial distribution using facebook, modifying consensus and blaming RL for breaking it, STR auction, promised&undelivered STR distribution to BTC&XRP holders, community communication, mccalebs secret bitcoin projects revealed as just a ripple fork with no real innovation..

Ripple Labs is strong in the business development side. Stellar's new consensus system is very much different from Ripple's. I would say the Stellar's FB distribution is a major win since over 4 million people have signed up.

>First, we need to acknowledge that SWIFT is not cheap. If Barclays had to send a SWIFT message to HSBC every time you wanted to pay £10 to Charlie, you would soon notice some hefty charges on your statement.

Why is this so? Sure in decades past it might have been expensive to send so many messages, but today it should be easily accomplished with moderate hardware. Wikipedia says SWIFT did about 15M tx/day in Sept 2010. That seems pretty miniscule as far as hardware load goes.

Swift have one of the biggest moats in the world. They are in all banks already, other businesses are not, they are already trusted and they sell both the service and the hw to access their service. So they can charge a lot for their services. What the banks want is a 100% reliable and traceable communications system that everyone trust. Good luck breaking into that market. :)

I imagine they dont mind paying a lot because they dont actually need to send that much information.

http://www.swift.com/solutions/pricing/fs_pricing_easier_200...

That looks to be a bit old version of their prices.

I've met some of the nice Belgian guys that run their support - not a job I'd really like. If there's a business where you need to be conservative, and defects are really not ok in any way, it's theirs.

Fortunately SWIFT pricing is freely available on the Internet: http://www.swift.com/solutions/pricing/fs_pricing_easier_200...

All the per-transaction prices are below 15 euro cents. Banks charge you many £/€ for a SWIFT transfer because they can, not because of what it costs; usually to subsidise the existence of branches.

Edit: I see another commenter has hit the same link :)

Great article on the global correspondent banking system.

For anyone interested in how US domestic payment systems work (checks, ACH, Visa/Mastercard) check out Payment Systems in the US by Carol Benson. It is the bible.

Now that was one of the most eye-opening small articles I've read in a while. Many a times over the years have I been privy to a tiny glimpse here and there of the internal workings of the banks. This helped open the portal a little.

Part of the issue is that banks and banking in general is so large and they have so many systems that the vast majority of people have no idea on the big picture of how things worked on a more fundamental level.

This changed to a large extent when Bitcoin came about and people (technologists especially) began asking what is money and how does it move.

The average person still has no idea though.

I love the article. This is a kind of explaining that really works for me - building bottom-up, outlining the problems that are to be solved and the new ones a solution introduces. Thanks for posting it, rndn!

https://news.ycombinator.com/item?id=6793063

Learned something today. This is an informative piece on the behind the scene activities on fund transfer between banks. Very nice.

I met Richard when I was working at a different bank. Nice chap.

Awesome! A nice and rare view into how banks work internally.

Thanks for sharing, really interesting.

Thats fascinating! nice find

Excellent article

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